Brand. The hip, catch-all word of the New Economy. It suggested
all a company needed to succeed was awareness. Image, as they say,
was everything.

Pat Harpell saw it up close as the CEO of Harpell Inc., an
integrated marketing firm in Maynard, Massachusetts. Over the past
few years, many entrepreneurs have called on her to create branding
programs, and she could see that old-fashioned branding strategies
had gone astray. "That's not a branding program;
that's a logo," she says. "Basic business principles
fell apart."

Branding turned into
a game of being seen for the sake of being seen, without giving
consumers a reason to buy.

What ultimately fell apart was the connection between companies
and consumers. Branding turned into a game of being seen for the
sake of being seen, without giving consumers a reason to buy.
"There's been a tremendous abuse of branding," says
Jeff Dufresne, managing director of BrandStorm, a brand consulting
group in Cincinnati. "I think people got confused and thought
branding was just throwing some ill-conceived advertising out there
to gain awareness."

With the dotcom fallout, companies are relearning the basic
lessons of what makes a successful brand-mainly, that you can't
live on image alone. Eyeballs don't equal sales, and logos
don't create loyalty. Consumers want to know what you're
all about and why they should trust you enough to purchase your
product. This will never change, no matter how much technology
alters our lives.

Remember Me? I'm the Customer

Many companies today are refocusing on something they'd all
but forgotten: their relationships with customers. After all, if
you had a lot of venture capital and a plan to take your company
public and sell it in six months, did you really need to spend time
figuring out your product's value to consumers? The answer was
no for the dotcoms-and the consultants they hired to create their
brands-that never did in-depth market analyses.

"There are a tremendous number of brand experts and
consultants in the world now who know nothing about the product,
nothing about the development of information technology that allows
you to interact with customers in the marketplace," says Regis
McKenna. Chair of The McKenna Group, a Silicon Valley-based
international consulting firm that works with technology companies,
McKenna helped Intel launch the first microprocessor and worked
with Apple to get the first PC to market. He even designed
Apple's famous logo. "When brand becomes abstracted from
what [your company does] from day to day, it loses meaning,"
he says.

Of course, building a brand is still as important as ever.
Brands simplify and add comfort to consumers' purchasing
decisions. Good brands deliver on a promise. (See "Case Study: Trader Joe's" below.) In
fact, it's rare to succeed long term without branding, Dufresne
says. "[Brand is] your fundamental relationship with an end
user, who is buying your service and creating revenue," he
says. "It's what sustains you."

THE QUIET
BRANDER

CASE STUDY: TRADER JOE'S

When Trader Joe's opened a few
stores around the Washington, DC, area last year, it was
overwhelmed with customers. This specialty retail grocery store has
nearly 159 stores and is expanding rapidly. Its Monrovia,
California, headquarters regularly receives calls from relocating
customers who want a list of the company's locations so they
can move near one.

Relocating to be near a grocery store?
What gives? How does Trader Joe's earn that kind of loyalty?
Consider the fact that the company does little advertising and
relies mainly on its newsletter, The Fearless Flyer, to promote its
products, new and old.

Pat St. John, Trader Joe's vice
president of marketing, sums it up this way: "We keep our
promise." That promise is delivering interesting, high-quality
foods at very good prices. But St. John says the Trader Joe's
"brand" isn't about the products; it's about the
customer experience. The company's employees, decked out in
Hawaiian shirts, are a friendly and knowledgeable presence for
customers navigating aisles stocked with unique products. "No
amount of advertising can create what we want to create with our
customers. [Advertising] can remind people, but it can't create
an experience," she says. "It's the personal
relationship with these people that builds
loyalty."

We Just Don't Talk Anymore

Nancy Koehn, a business historian at Harvard Business School,
researched the lives of six famous entrepreneurs for her new book,
Brand New: How Entrepreneurs Earned
Consumers' Trust From Wedgwood to Dell (Harvard
Business School Press). She learned that those entrepreneurs were
obsessed not only with an idea, but with meeting a consumer need.
Consider Josiah Wedgwood, an 18th century British potter who saw
the average Briton yearning for social status. He positioned his
products by targeting the aristocracy, knowing this would attract
customers from lower economic brackets as well. His strategy
worked, and still works today.

What those entrepreneurs did so well, Koehn says, was create
ongoing, two-way dialogues with consumers-and alter their products
based on what they heard. Wedgwood met a need for status, Lauder
played into the post-war 1940s glamour boom, and Schultz tapped
into the need for community in a disconnected world. Along the way,
consumers got the branding message: This product is unique, and
therefore better. Advertising didn't buy consumers'
loyalty. Instead, long-term loyalty came from consistently
fulfilling a promise and creating a great customer experience.

Branding has become
a monologue instead of a dialogue. Entrepreneurs need to leave
their ivory office towers and talk to people.

It's that dialogue that's been missing lately, Koehn
says, and it's essential to any branding strategy. Branding has
become a monologue instead of a dialogue. Entrepreneurs need to
leave their ivory office towers and talk to people. They need to be
responsive to their customers. (See "Case
Study: Krispy Kreme" below.) They have to make sure their
branding messages are understood by everyone inside the company.
"Over the last few years, people [didn't realize] how hard
branding really is," Koehn says. "But its rewards are
equal to its difficulty."

Harpell recently studied a group of new companies to see how
ingrained their branding messages were inside those companies. She
found that many employees weren't aware of their companies'
branding messages at all. "There was no brand connection, no
teaching of employees and no communicating with consumers,"
Harpell says.

The Web's a problem, too. When management and technology
consulting firm Accenture and technology research company Online
Insight surveyed 2,000 online consumers last year, they found that
a lot of the givens about the Web that marketers operate under are
false. While most marketing is aimed at youth, the average online
shopper is 35 to 44. Entrepreneurs also assumed that ads drew
consumers to their sites while customers surveyed relied on search
engines. And the low prices companies touted weren't what
customers were looking for: They wanted a satisfying customer
encounter that was fast and convenient.

"[Branding] is about more than the sock puppet. It's
about the total customer experience," says Kelly Dixon,
co-author of the study and director of e-branding at Accenture in
Chicago. "Companies haven't focused on the entire
package."

Consumers developed a love-hate relationship with late-'90s
branding strategies, observes David Schumann, consumer psychologist
and associate dean at the University of Tennessee in Knoxville. On
one hand, seeing logos invade every inch of public space has left
U.S. consumers over-exposed to branding. On the other hand,
consumers are paying attention, if only briefly, to discover
whether you'll reveal that one clear benefit your product or
service offers that'll make them try it. The problem is, this
"one clear benefit" has been missing in plenty of
branding campaigns, and Schumann sees companies facing the fallout:
consumers sticking with the products they've trusted for a long
time instead of taking a chance on products they don't really
understand. When the value proposition is missing, Schumann says,
risk-averse consumers will go with what they know.

THE
TOUCHY-FEELY BRANDER

CASE STUDY: KRISPY KREME

This Winston-Salem, North Carolina,
company produces more than 3 million doughnuts a day. When it
opened its first Denver location in March, doughnut fans camped out
the night before, and lines extended out the door for days.
Customers who want Krispy Kremes in their area or just want to say
how much they like the doughnuts send 5,000 e-mails a
month.

But Krispy Kreme relies on
word-of-mouth and doesn't advertise outside of the occasional
billboard. So why is it such a successful brand?

"We look at every touch point with
consumers as an opportunity to brand," says Stan Parker,
Krispy Kreme's senior vice president of marketing. When the
"Hot Doughnuts Now" neon sign is on, customers come
running. You can peer through glass windows as doughnuts make their
way along the conveyor belt, and the smell is irresistible.
"You can eat them hot," Parker says. "That's a
huge brand-building asset for us."

Back to Basics

Suddenly, branding isn't as much about generating buzz as it
is about fundamentals. When Harpell surveyed marketing
professionals and CEOs in February, she found generating leads,
making sales and developing new channels were the new priorities,
not branding. Only 19 percent listed branding among their top
challenges. "People are starting to get it that it's not
enough to get out and bang a gong as loudly as you can,"
Harpell says. "You have to have some meat behind the
sizzle."

What's it like when everyone sees your logo and
instantly knows who you are? Just ask Nike. The Nike Swoosh is
immediately recognizable, and the company's slogan, "Just
Do It," has become a part of the American lexicon. The power
of its branding helped Nike sprint past the competition in the
1970s and '80s.

But even Ã¼berbranders can stumble.
Nike started losing its brand edge when it changed its focus in the
1990s from traditional athletics to more outdoorsy activities like
hiking. Adidas and Reebok grabbed greater market share. Lesson #1:
Be careful in changing brand identity.

Lesson #2: In the process of
rebranding, Nike overbranded and seemed more focused on trendy
celebrity marketing than on creating good, affordable shoes-and,
consequently, priced shoes too high for most buyers.

Lesson #3: A well-known brand often
becomes a target for consumer protest, as Nike found out a few
years ago when it faced allegations regarding its foreign labor
practices. "They've weathered it pretty well, but it's
left a stain on their reputation," says Sheri Bridges, an
associate professor of marketing at Wake Forest University in
Winston-Salem, North Carolina. It may have affected Nike's
bottom line, too. Nike announced in February that it wouldn't
meet its latest sales projections, and it's refocusing on what
it once did best: midpriced footwear.